UK consumers bought more SIM-only contracts than PAYG or traditional post-pay methods including a device in the third quarter, leading to warnings that operators need to re-evaluate their business models.

Data from GfK showed that there were 900,000 more tariffs of all types sold in the period and SIM-only contracts accounted for almost half of them.

SIM-only contract tariffs accounted for 29 percent of all mobile sales in the three months to 30 September, the research firm said, up 20 percent on the previous quarter.

The low-cost nature of SIM-only contracts was the biggest driver, GfK suggested, and they were attracting those on PAYG and contract handset tariffs in equal measure.

However, it noted that on average SIM-only contract customers were “less heavy users” of their mobile devices.

Both Vodafone and Three launched new SIM-only offerings at the end of August.

The former’s VOXI offering is targeting the under-25s, while the latter’s Smarty turns unused data from each month into a discount off the next bill.

Imran Choudhary, Director of Technology at GfK, said: “SIM-only (SIMO) contracts are specifically designed to offer customers value for money.

“Once they switch to contract SIMO, a sizeable portion tend to remain with this type of contract for their next purchase.

“In fact, of all contract SIMO acquisitions this quarter, 44 percent came from an existing SIMO tariff.

“Even when consumers are ready to buy a new handset, many will buy a SIM-free device.

“This suggests customers are beginning to de-couple the handset purchase from the tariff purchase and choosing to buy both separately.

“Traditional contract handset sales are the bedrock of most mobile operators’ and retailers’ business models in the UK.

“If this de-coupling continues to gather momentum over here, many will have to re-evaluate their go-to market strategies.”

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